Shelby County Health Care Corp. v. Baumgartner
| Decision Date | 26 January 2011 |
| Docket Number | No. W2008-01771-COA-R3-CV,W2008-01771-COA-R3-CV |
| Parties | SHELBY COUNTY HEALTH CARE CORPORATION, d/b/a REGIONAL MEDICAL CENTER v. JOHN BAUMGARTNER, ELIZABETH BAUMGARTNER, a/k/a DARAY BAUMGARTNER, NATIONWIDE MUTUAL INSURANCE COMPANY, AND HARTFORD ACCIDENT AND INDEMNITY |
| Court | Tennessee Court of Appeals |
July 21, 2009 Session1
An Appeal from the Circuit Court for Shelby County
No. CT-002323-04 Kay S. Robilio, Judge
This appeal involves the impairment of a hospital lien. The individual defendant was treated at the plaintiff hospital for injuries sustained in an automobile accident caused by a third-party tortfeasor. The patient incurred substantial medical expenses. The hospital filed a hospital lien for the amount of the patient's medical expenses. Subsequently, the patient received insurance proceeds from his own insurance company under his uninsured motorist coverage, and another payment from the tortfeasor's insurance company. Nothing was paid to the plaintiff hospital. The hospital filed this lawsuit against both insurance companies for impairment of its hospital lien. The parties filed motions for summary judgment. The trial court granted in part the hospital's motion for summary judgment. Against the patient's own insurance company, the hospital was awarded one-third of the monies the patient received. Against the tortfeasor's insurance company, the hospital was awarded an amount equal to the policy coverage limit. The hospital now appeals, arguing that it was entitled to recover from both insurance companies jointly the reasonable cost of the hospital services rendered to the patient. The insurance companies also appeal, arguing that there was no impairment of the lien and that, if there was impairment, the hospital's recovery should have been limited to one-third of the payments made to the patient. We affirm in part and reverse in part, finding that the hospital's lien was valid and was impaired, but that the hospital can recover only for the damages caused by the impairment of its lien.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is
Affirmed in Part and Reversed in Part and Remanded
John C. Speer, Colleen D. Hitch, and Tiffany A. Yates, Memphis, Tennessee; Jody Manire Kris and Kelly Thompson Cochran, Washington, D.C., for the Defendant/Appellant, Hartford Accident & Indemnity Co.
Curtis H. Goetsch, Germantown, Tennessee, for the Plaintiff/Appellant, Shelby County Health Care Corporation d/b/a Regional Medical Center
Parks T. Chastain and Gordon C. Aulgur, Nashville, Tennessee, for the Defendant/Appellee, Nationwide Mutual Insurance Company
Robert E. Cooper, Jr., Tennessee Attorney General & Reporter; Michael E. Moore, Solicitor General, and Shayna Abrams, Assistant Attorney General, as intervenor in defense of the constitutionality of Tennessee Code Annotated § 29-22-104(b)(1)
Facts and Proceedings
Background
On November 13, 2003, Defendant John Baumgartner ("Mr. Baumgartner") and George H. Brewer ("Mr. Brewer"), both residents of Arkansas, were involved in a two-car automobile collision in Woodruff County, Arkansas. Mr. Brewer was at fault for the collision. Mr. Baumgartner was severely injured in the accident, and was initially brought to a hospital in Arkansas. The next day, in light of the severity of his injuries, he was transferred to the Regional Medical Center in Memphis, Tennessee, a hospital operated by Plaintiff/Appellee Shelby County Health Care Corporation ("The MED").
Upon his arrival, Mr. Baumgartner's wife, Defendant Elizabeth Baumgartner, a/k/a Daray Baumgartner ("Mrs. Baumgartner"), informed The MED's staff that her husband's injuries were sustained when his car was hit by another vehicle. She told The MED staff that the Baumgartners had uninsured motorist insurance coverage under their automobile insurancepolicy issued by Defendant/Appellee Nationwide Mutual Insurance Company ("Nationwide").2
Mr. Baumgartner was treated at The MED for over a month. He was finally discharged on December 23, 2003. The cost of the medical services rendered to Mr. Baumgartner totaled $529,840.30.
On November 19, 2003, a few days after Mr. Baumgartner's accident, the Arkansas police officer who had arrived on the scene completed a Motor Vehicle Collision Report. This report identified Mr. Brewer as the driver at fault for the collision, and it indicated that he was insured by Defendant/Appellant Hartford Accident and Indemnity ("Hartford"). The report was filed in Arkansas, and The MED did not obtain or receive a copy of it.
On November 25, 2003, while Mr. Baumgartner was still being treated at The MED, The MED filed its initial Affidavit for Hospital Lien for the medical services provided to Mr. Baumgartner. Pursuant to the Hospital Lien Act of Tennessee, Tennessee Code Annotated § 29-22-101, et seq. ("HLA"), the lien affidavit was filed with the Circuit Court Clerk for the Thirtieth Judicial District at Memphis ("Circuit Court Clerk"). As required under Section 29-22-102, The MED sent a copy of the hospital lien affidavit to Mr. Baumgartner via registered mail.
Under the terms of the HLA, on January 5, 2004, within thirty days of Mr. Baumgartner's discharge, The MED filed an Amended Affidavit for Hospital Lien. The amended affidavit added Nationwide and updated the amount of the hospital lien to $529,840.30, the total cost of the medical services provided to Mr. Baumgartner. The MED mailed a copy of the amended hospital lien via registered mail to Mr. Baumgartner and to Nationwide. The MED did not name either Mr. Brewer or Mr. Brewer's insuror, Hartford, on the lien, nor did it mail either of them a copy of the lien. The record does not indicate that The MED had actual knowledge of either Mr. Brewer or Hartford at the time it filed the amended hospital lien.
Soon thereafter, on or about January 16, 2004, both Nationwide and Hartford entered into settlement agreements with Mr. and Mrs. Baumgartner. Under the settlement agreements, both insurance companies agreed to pay the Baumgartners the policy limits on the applicable insurance policies. Specifically, Nationwide paid its policy limits of $25,000, pursuant to the uninsured motorist provisions of the Baumgartners' automobile insurance policy. Hartford paid the Baumgartners its policy limits of $100,000, pursuant to Mr. Brewer's automobile liability policy. At the time it entered into the settlement agreement with the Baumgartners, Nationwide had knowledge of The MED's hospital lien. The record does not indicate that Hartford had knowledge of The MED's hospital lien at the time that it entered into the settlement agreement with the Baumgartners. Hartford did not check with the Shelby County Circuit Court Clerk's office to determine whether a hospital lien had been filed before it paid insurance proceeds to the Baumgartners. All of the total $125,000 in insurance proceeds were paid directly to the Baumgartners, and neither the Baumgartners nor the insurance companies paid any monies to The MED or any other medical service provider.
Trial Court Proceedings
On April 22, 2004, The MED filed a lawsuit in the trial court below against Mrs. Baumgartner. As damages, the complaint sought the cost of the medical services rendered to Mr. Baumgartner, plus attorney fees of $176,506.23, interest, and costs. The case was assigned to Shelby County Circuit Court Division VIII, The Honorable D'Army Bailey presiding.
On December 9, 2004, The MED filed its first amended complaint, adding Mr. Baumgartner and Nationwide as defendants. The amended complaint asserted a claim against Mr. Baumgartner and Nationwide for $529,518.70, the approximate total cost of The MED's hospital lien, based on breach of contract and impairment of The MED's hospital lien in violation of the HLA.3 On April 20, 2005, Nationwide filed a cross-claim against the Baumgartners, seeking indemnity for any liability it might incur to The MED, based on an indemnity provision in the settlement agreement between Nationwide and the Baumgartners. On May 9, 2005, The MED filed a second amended complaint, adding Hartford as a defendant and asserting claims against it for the full amount of the hospital lien as damages for the impairment of its lien.4
On June 1, 2005, Nationwide filed a motion for summary judgment, claiming that it was entitled to judgment as a matter of law on the undisputed facts. As the premise for its argument, Nationwide asserted that Arkansas law applied to the issues before the court, because the Baumgartners were Arkansas citizens and the accident occurred in Arkansas. Under Arkansas law, Nationwide argued, The MED's hospital lien could not be enforced until the Baumgartners were made whole, pursuant to application of the made-whole doctrineunder Arkansas common law.5 Because the Baumgartners were not made whole by the settlement payment, Nationwide contended, The MED's lien was not enforceable. Alternatively, Nationwide claimed that, if the court found that The MED's hospital lien was valid and that Nationwide impaired it, then Nationwide would be entitled to indemnity from the Baumgartners for any amount that Nationwide was obligated to pay to The MED for the impairment of that lien.
On July 20, 20 05, the trial court entered an order granting in part and denying in part Nationwide's motion for summary judgment. The trial court held that Arkansas law was not applicable, because It concluded, then, that the made-whole doctrine "has no application in this case." Therefore, it denied Nationwide's motion insofar as Nationwide claimed that The MED's hospital lien was unenforceable. However, the trial court granted Nationwide's motion in part by holding that, in the event that The MED was entitled to...
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